TLDR
- Abbott Laboratories missed Q4 revenue forecasts with $11.5 billion in sales versus $11.8 billion expected, triggering an 8% stock decline
- Nutrition business plummeted 8.9% while diagnostics fell 2.5%, offset by 12% growth in medical devices
- Company projects 2026 earnings of $5.55 to $5.80 per share with 6.5% to 7.5% organic sales growth
- Exact Sciences acquisition worth $21 billion remains scheduled to close in Q2 2026
- Rising commodity costs and price increases continue to pressure the nutrition segment
Abbott Laboratories shares dropped 8% Thursday after the healthcare company reported fourth-quarter results that disappointed investors. The company posted adjusted earnings of $1.50 per share, matching analyst expectations.
Revenue told a different story. Abbott generated $11.5 billion in sales, missing the $11.8 billion Wall Street consensus by $300 million. Organic sales grew just 3% year-over-year.
The nutrition division continues to weigh heavily on overall performance. Sales in this segment crashed 8.9% during the quarter. This marks another period of steep declines for the business that includes Similac infant formula and Ensure supplements.
Rising Costs Squeeze Nutrition Margins
CEO Robert Ford addressed the ongoing nutrition challenges on the earnings call. Manufacturing costs have climbed consistently over the past few years, he explained. Post-pandemic commodity price spikes remain embedded in the company’s cost structure.
Abbott raised prices to combat these higher expenses. However, those price increases have backfired in the current economic climate. Ford admitted the hikes are now constraining volume growth as consumers pull back.
Other business units delivered better results. Medical devices sales surged 12% while established pharmaceuticals climbed 9%. Diagnostics sales slipped 2.5%, which Abbott expected due to lower COVID testing demand.
The benchmark S&P 500 gained 0.6% on the same day Abbott shares fell. Competitor Johnson & Johnson rose 0.9% after reporting its earnings Wednesday.
Forward Outlook and Acquisition Update
Abbott provided 2026 guidance alongside the quarterly results. The company expects adjusted earnings between $5.55 and $5.80 per share. That range centers around the $5.68 analyst consensus.
Management forecasts organic sales growth of 6.5% to 7.5% for the full year. Ford said Abbott is “well-positioned for accelerating growth in 2026” despite current headwinds.
The company is pushing forward with its $21 billion acquisition of Exact Sciences. The deal would be Abbott’s largest since 2017. Exact Sciences owns Cologuard, a leading at-home colorectal cancer screening test.
Abbott confirmed the transaction remains on schedule to close during the second quarter of 2026.
This isn’t the first time Abbott shares have tumbled on earnings day. In July, the stock fell 8.5% even though second-quarter earnings met estimates. Investors reacted negatively to softer guidance, establishing a pattern of disappointment.
Abbott also increased its quarterly dividend to $0.63 per share, up from $0.59. The new dividend translates to an annualized payout of $2.52 and a 2.1% yield. Shareholders of record as of January 15th will receive the payment on February 13th.
Shares opened at $120.82 Thursday and continued declining throughout the session.
